Business Valuation: Conclusion of Value, Incorrect Weighting of Methods

This week, I am discussing (a business valuation report that has used a weighted average of the market, income and asset approaches).  In my opinion the analysis was inaccurate and indicates bias by determining an artificially low value.   Initial Business Valuation Conclusion The expert has performed the Asset, Market and Income Approach to determine…  Continue Reading »

Business Valuation: Incorrect Cost of Goods Sold and Gross Profit

Cost of Goods Sold Based on Historical Trends It is common to see a Discounted Cash Flow in a business valuation report.  There are a lot of companies that sell or manufacture a product.  These types of companies are supposed to account for the inventory needed to sell their product.  Exhibit 1 below is an…  Continue Reading »

Business Valuation: Misapplication of Forecasted/Projected Revenues and Operating Income

Forecast Based on Historical Trends It is common to see a Discounted Cash Flow in a business valuation report.  With COVID-19 in the recent past, the business valuation community is aware of using prior data that is no longer reliable.  If a company has experienced a downturn and has not fully recovered to the pre-COVIDS-19…  Continue Reading »

Business Valuation: Introduction to Symmetrical Data

This week, I am discussing the use and misuse of symmetrical data using market multiples from sales transaction databases.  Symmetric data is observed when the values of variables appear at regular frequencies or intervals around the mean (average). Asymmetric data, on the other hand, may have skewness or noise such that the data appears at…  Continue Reading »

Business Valuation: Selecting Market Multiples

This week, I am discussing the selection of market multiples from various databases and the process of eliminating transactions that are not comparable.  I will not be discussing all of the reasons to eliminate transactions for not being comparable but will give you an idea of what the process is like. Types of Databases There…  Continue Reading »

Business Valuation: Inappropriate Benchmarking

I have been valuing closely held companies since 1985. I have earned two of the highest and most challenging designations in the business valuation field including the CBA and ASA. I am a Certified Public Accountant, have a Master’s in Business Valuation and holds the ASA, CBA, ABV, ICVS, CVA, MAFF, CFD, CVGA, ICVS-A credentials.…  Continue Reading »

Business Valuations: Benchmarking and Trending of Financial Data

I want to talk about benchmarking and trending of financial data in the context of a business valuation.  Reviewing other experts reports, I believe there is some confusion among business valuation experts as to what benchmarking and trend analysis is. Benchmarking Using Risk Management Associates It is my experience that in the business valuation world,…  Continue Reading »

How To Find A Business Valuation Expert

Understanding Business Appraisers Accreditations Business Valuation: What a Business Appraisers Accreditations Mean and What They Can Tell You About the Appraiser. I want to address the by comparing and contrasting the requirements to obtain the various business valuation credentials.  Some of the designations are extremely difficult to achieve while others are not as stringent. “Is…  Continue Reading »

Medical Helicopter Missions in Vietnam
J. Richard Claywell, Viet Nam Medic

Background I want to tell you something personal about me that very few people know. I was a medic in Vietnam from November 1969 through August 1971. I was assigned to a battalion aid station at Tam Ky and was extremely fortunate as the physicians took several medics under their wings and taught us how…  Continue Reading »

Business Valuation: Reliance on Third Party Appraisers

I want to address the reliance on third party appraisals and the requirement for their use. I first want to address the Professional Standards that apply to all Certified Public Accountants Certified Valuators and Analysts. Within the business valuation standards of both of these professional business valuation organizations is paragraph 20 that discusses “Using the…  Continue Reading »

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